Supreme Court judgment in M Hakeem case not prospective in application: Delhi High Court Division Bench

The Delhi High Court recently held that the Supreme Court’s judgment in NHAI v. M Hakeem & Anr, which restrained courts from modifying arbitral awards under Section 34 of the Arbitration & Conciliation Act, 1996, is not prospective in its application [Anil Kumar Gupta v. Municipal Corporation of Delhi & Anr]. .A Division Bench of Justices Yashwant Varma and Ravinder Dudeja rejected the argument that the awards and decisions rendered prior to M Hakeem should be left untouched.“The submission of learned counsel that awards and decisions rendered prior to M. Hakeem should be left untouched also cannot possibly be countenanced bearing in mind the indubitable principle of judgments principally being declaratory in character. M. Hakeem also does not indicate the Supreme Court having adopted the precept of prospective overruling, a power which is otherwise recognised to inhere in that court,” the judgment stated..The Court was hearing an appeal filed by one Anil Kumar Gupta against the judgment and order dated December 12, 2018 and August 8, 2019 passed by a single-judge in a petition by the Municipal Corporation of Delhi (MCD).In his judgment, the single-judge partly allowed the Section 34 petition and reduced the rate of interest awarded in Gupta’s favour by the arbitral tribunal from 18% to 12%. The judgment also restricted the application of interest from the date of accrual of cause of action - March 8, 2004 - and said that it would commence from the date of invocation of arbitration - July 6, 2008..After the Section 34 petition had been finally disposed of on December 12, 2018, MCD moved an application for modification, which was accepted and disposed of in terms of the order dated August 8, 2019.By this order, the single-judge set aside the award rendered by the arbitral tribunal on certain other claims, denied interest payable in terms of Section 31(7) of the Arbitration Act and denied interest payable in terms of clause (a) thereof completely..On appeal, the Division Bench concluded that the August 2019 order is liable to be set aside on the ground that the December 2018 judgement was reopened by the respondents’ mere filing of a modification application.The Court reasoned that once the Section 34 petition had been finally disposed of, the only recourse available to the respondent was to petition for review.“It becomes pertinent to note that the order of 08 August 2019 cannot possibly be construed as being representative of the learned Judge exercising the review power. As we read the said order, we come to the firm conclusion that the same constitutes a decision reached on a de novo rehearing as opposed to the discovery of a patent error or mistake apparent on the face of the record. We are of the firm opinion that once a matter comes to be finally disposed of it cannot be re-opened except in accordance with a procedure which stands sanctioned in law. We, thus, come to the firm conclusion that the judgment rendered on 12 December 2018 could not have been re-opened in the manner that the learned Single Judge chose to adopt. The order of 08 August 2019 is thus liable to be set aside on this ground alone.”.It added that the Supreme Court in M Hakeem, while explaining the extent of the ‘setting aside’ power, has categorically held that modification of the award would clearly not fall within the scope of ‘setting aside’.The Bench held that the single-judge's order of December 12, 2018 clearly breached the injunction of the Supreme Court which said that a Section 34 Court can only set aside the award.“Accordingly, and for all the aforesaid reasons, the instant appeal stands allowed. All pending applications shall also stand disposed of. The orders dated 12 December 2018 and 08 August 2019 as passed by the learned Single Judge are hereby set aside. The Section 34 petition shall in consequence stand restored and placed on the board of the learned Single Judge for consideration afresh and in light of the observations appearing hereinabove,” the Court finally ordered..Advocates Dr Amit George, Aditya Chibber, Rayadurgam Bharat and Arkaneil Bhaumik appeared for Gupta.MCD was represented through Advocates Sunil Goel, Akshita Jain and Himanshu Goel..[Read Judgment]